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Kansas City Property Management Information

Property Investments for Beginners: How to Get Started

Tom Sedlack - Thursday, February 24, 2022
Property Management Blog

IS record-high inflation is making you jumpy about your stock portfolio? You might be considering moving money into real estate instead. But where should you start with making property investments?

As with any investment, it’s good to understand what you’re buying and what makes for a smart buy. The income appeal of rental property investment drives many investors, but there are far more factors than house prices involved in playing the real estate game.

Let’s take a look at the basics you need to consider to get started.

Pick Your Properties

You have a lot of options for buying an investment property from property type to location. Decide early on if you want to focus on single-family homes, raw land, or commercial properties. Each of these has different criteria for choosing good investments.

With rentals, you still have options that could include a single condo or an entire apartment complex. You might want to focus on a Class A neighborhood where rents are higher and tenants more reliable, but know that you will pay more to get into the market. A Class D neighborhood might look good with bargain-basement prices but could leave you with more maintenance and tenant headaches than you care for.

Pay For Property

Real estate offers some creative options for paying for a property so don’t assume you need an investment property mortgage. Some people pull money out of other investments to pay cash, while others might take out a home equity loan on their house to buy one as a rental.

Even with investment property loans, you have options as there are loans specifically geared for those developing raw land or rehabbing a property. One specifically geared toward real estate investment is a hard money loan, which can be easier to get than a conventional bank loan.

However, it’s a short-term loan lasting about three years with a higher interest rate than longer loans. As such, it’s not geared to those with a buy-and-hold strategy.

You might also invest using private money, which could come in the form of owner financing or finding investors.

Manage Your Properties

Once you own the property, it’s time to start managing it. This encompasses three aspects — dealing with tenants, maintaining the property, and managing your portfolio.

Tenants can be one of the trickier areas to manage since you need to understand all the state laws that cover that relationship. This includes everything from what can be in the lease to the proper procedure for eviction. Maintenance is a bit easier since it tends to include most of the chores you would do for your own home.

Managing your portfolio requires regular assessment of whether the property is performing as well as you’d like. You need to track not just cash flow, but also keep track of things like vacancy rates and the rental market to ensure you can continue to make a profit with that property.

All of these management tasks are things you could do yourself, or you could hire someone to help you deal with parts of it. You can also contract out the whole thing and let someone else worry about the details.

Make Your Property Investments

Getting started in real estate investing can be a daunting affair, but understanding the basics of how to choose properties that can make a profit is a huge first step. When you get that part right, paying for the property and managing it later become much easier.

If you’re interested in making property investments in the Kansas City area, contact us to get started. Our realtor and investment property management services can get you into the right neighborhoods and keep your business running smoothly.


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